I’ve gotten some messages from former clients who follow business news. There are some big-deal lawsuits flying around regarding the Multiple Listing Service and buyer agent compensation. The outcome of recent lawsuits is likely to increase seller awareness of the part of the commission that is paid to the buyer’s agent who brings an informed and ready buyer to closing.

Market forces are likely to show that commissions will not go down as a result of this litigation. Instead, the cost burden, which was shared, may increase for home buyers.

Why the purchase price includes your buyer’s agent’s commission

Common sense shows that both buyers and sellers could claim that they pay real estate agent commissions. The buyers are bringing the funds. Those funds are then paid to the agents by the sellers as a cost of the transaction. Litigation intends to separate the buyer’s agent commission. The result could be that buyers pay the seller’s agent through their purchase price at closing, then must also pay for a buyer’s agent. This does not reduce real estate fees; it shifts the burden unfairly onto buyers.

Prospective home buyers need professional guidance when buying a home. When spending hundreds of thousands of dollars on a home, it is important to avoid barriers to professional support. The recent litigation is threatening to create those barriers.

4 Buyers Real Estate stands against changing the current system of paying real estate commission out of the purchase price. We believe the burden is on seller’s agents to practice high levels of transparency when they discuss commissions with their sellers. Their contracts should be clear. That would resolve the complaints of the plaintiffs of recent lawsuits.

About the Multiple Listing Service (MLS)

The Multiple Listing Service (MLS) –which is a target of these lawsuits — is a large database providing up-to-date property information. The database shares information about what commission will be paid to an agent who brings an informed and ready buyer. If the MLS database is dismantled, it will harm sellers by limiting advertising of their properties for sale.

Calls for dismantling rules requiring REALTOR® members to list all advertised properties on the MLS are dangerous. If REALTORS®  bypass their local MLS and instead use alternative platforms, access to properties for sale becomes harder for buyers. Buyers will need to seek out multiple databases to find what is for sale. Sellers lose the power that a unified database, which is regulated and kept current, provides to them.

Making homes harder to find, buy, or sell

A by-product of breaking up the Multiple Listing Service is that smaller databases could be harder to find. This would inconvenience buyers. It could reduce the number of buyers seeing a particular home. That is a disadvantage to sellers, in the form of less competition for their home and possibly lower sale prices.

“Why would any seller want to limit exposure of their listing to home buyers,” Rich Rosa, President of the National Association of Exclusive Buyer’s Agents said. “A seller doesn’t have to use a REALTOR® or any real estate agent, but real estate professionals should not encourage ‘pocket listings’ and limit which consumers see homes for sale.”

MLS helps prevent discrimination

If some consumers are left out because they have less access, it could cause a Fair Housing concern. The MLS, as a unified database of all REALOR® represented properties for sale, is one-stop-shopping for buyers.

Searching multiple databases to find all properties for sale is unequally hard for some buyers. If real estate advertising is no longer unified, minority and disabled buyers could be left out of knowing about properties for sale.

The recent legal actions, we believe, work against the financial interests of buyers and of sellers of real estate.